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STATE OF COLORADO <br />DIVISION OF RECLAMATION, MINING AND SAFETY <br />Department of Natural Resources <br />1313 Sherman St., Room 215 <br />Denver, Colorado 80203 <br />Phone: (303) 866-3567 <br />FAX: (303) 832-8106 <br />July 31, 2008 <br />Scott Wanstedt <br />Blue Mountain Energy, Inc. <br />3607 County Road #65 <br />Rangely, CO 81648 <br />RE: Deserado Mine, Permit C-81-018 <br />Second Quarter 2008 Coal Processing Waste Banks Report <br />Dear Mr. Wanstedt, <br />COLORADO <br />D IV IS I ON OF <br />RECLAMATION <br />MINING <br />SAFETY <br />Bill Ritter, Jr. <br />Governor <br />Harris D. Sherman <br />Executive Director <br />Ronald W. Cattany <br />Division Director <br />Natural Resource Trustee <br />The Colorado Division of Reclamation, Mining, and Safety (CDRMS) have found the above <br />referenced report to be in compliance with CDRMS Regulations: 4.09.1(11) and 4.10.2(2). <br />Please note that a minimum of quarterly inspection is required and for Deserado, more frequent <br />inspection is required during critical construction periods associated with 1) removal of topsoil, 2) <br />installation of surface drainage systems, 3) placement and compaction of materials, and 4) <br />revegetation. Please ensure that these specific activities are inspected and documented by date in the <br />report if they should occur during the quarter. <br />It is noted that two maintenance issues were completed since the First Quarter Report, <br />Material was stockpiled during most of the quarter and refuse was dumped, spread, and compacted on <br />both 2/3/4 and 5a. Nine compaction tests were performed during the quarter and all tests exceeded the <br />required Proctor level of 90%. As of the date of the report, a total of 5,453,046 tons of wet refuse have <br />been placed in the 2/3/4 combined sub-area and a total of 2,571,716 tons of wet refuse have been <br />placed in sub-area 5. <br />If you have any questions feel free to contact me. (303) 866-6424 <br />Sincerely, <br />Jason Musick <br />Environmental Protection Specialist <br />Cc: Dan Hernandez, CDRMS <br />Office of Office of <br />Mined Land Reclamation Denver • Grand Junction • Durango Active and Inactive Mines